Starting by this week, as many countries are gradually getting rid of the virus and a recovery in oil demand is expected as normalization discourses relieve economies and travel restrictions. Production is expected to keep declining due to current over supply and low prices.
Therefore, it would not be wrong to expect the oil market to stabilize in the third quarter and the need for supply in the fourth quarter. Some analysts expect Brent to reach $ 43 per barrel by the end of 2020 and $ 55 per barrel by mid-2021.
Global benchmark Brent crude oil was finally traded at $ 29.15 a barrel, while US West Texas Intermediate (WTI) crude was $ 22.11.
While coronavirus caused severe lockdowns all around the world, it collapsed demand for oil and Brent dropped about 56% this year, even WTI entered the historical negative zone last month.
Strong in oil demand in the second quarter and minus 15 million barrels (mbpd) annually a contraction is expected.
Global oil supply is expected to shrink by around 6 mbpd annually in the second quarter of the year.
Oil demand is likely to continue to improve in the second half of this year. However, the behavior of consumers who keep up with the economies affected by the virus may avoid a rapid recovery in pre-crisis demand levels.
On the supply side, while production cuts gradually decrease, OPEC is expected to increase production by 2 mbpd in the second half of 2020.
Organization of the Petroleum Exporting Countries, Russia and other producers known as OPEC + started a record 9.7 mbpd production cuts on Friday.